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London Climate Action Week 2021 — Working together to find solutions to climate change

By Dr Martin Farrar, Associate Technical Director – Management Accounting, , Association of International Certified Professional Accountants

In its third year, London Climate Action Week (LCAW) is harnessing the power of London for global climate action. The annual event brings together the city’s world-leading array of climate professionals and communities.

Facing a problem as big as climate change, it is easy to feel powerless. I have been researching sustainability and climate issues over the last five years, and their complexity can be overwhelming, especially as the science keeps evolving.

Inter-disciplinary conversations help me take what works well in another sector, industry or academic area and apply the principles to my situation. That is why events such as LCAW are important. Only by working together will we find climate change solutions.

Finance professionals play a crucial role in helping organisations address and improve their impact on the planet. As governments, institutions and organisations set targets to a race to net zero, now is the time to build your climate and carbon literacy so you can play your part.

Bill Gates, in his book How to avoid a climate disaster, discusses what each of us can do to influence and make a difference. Gates’ suggestions to consumers:

  • Reduce your home’s emissions.
  • Buy an electric vehicle.
  • Sign up for a green pricing program with your electric utility.
  • Try a plant-based burger.

With Gates’ direction at the back of my mind, recommendations from the Task Force on Climate-related Financial Disclosure (TCFD) inform my climate journey as a consumer.

Reducing my home’s emissions

The property I live in is 50 years old and in need of an update. Consequently, I have been working with an architect to think about how the space is used and how the property needs to change to meet my future needs. As part of this dialogue with my architect, we use the TCFD 2°c degree scenario recommendation to understand the potential impact climate has on the property in the next 20 years. It was also an opportunity to identify climate-related risks, categorised in the TCFD recommendations as:

  • Transition risks — these relate to the transition to a lower-carbon economy
  • Physical risks — these relate to the effects of climate change

A 2°c degree temperature increase in the United Kingdom will bring wetter winters and summers of droughts and heat waves. By 2040, summer heat waves, of above 35°c degrees, are predicted to become the norm in the U.K. Yet, at the same time, the U.K. in winter could experience increases in extreme hourly rainfall intensity, leading to a greater risk of flash flooding across the country.

In discussions with my architect, the scenario forced us to think about how to change the property’s design to cope with the increase in the frequency and intensity of hot days and other days of heavy rainfall. It’s a future where rainfall is either increasingly abundant or in desperately short supply.

At the same time, in the design stage, we considered the benefits of retrofitting the building with extra insulation to achieve an ultra-low energy performance. The solution will be a ‘Passivhaus approach’ that ‘relies on high levels of uninterrupted, all-round insulation, airtight design and heat gained from winter sun through the windows’. As the Passivhaus concept applies in hot climates as well as in cold, it will help mitigate the physical risk of changing U.K. weather patterns and, at the same time, transform the building’s energy performance to reduce its carbon footprint.

By experimenting with the TCFD 2°c degree scenario on my property, it forced conversations outside my working discipline and a systems thinking approach. It’s a leap from an efficient property project to an effective one. This is learning that I can take back to the workplace and use to understand how climate affects strategy, business model and financial planning.

Buying an electric vehicle

The TCFD recommendations, when thinking about metrics and targets for greenhouse gas (GHG) emissions, specify scope 1, scope 2 and scope 3.

  • Scope 1: Direct GHG emissions — These are from sources an organisation owns or controls.
  • Scope 2: Electricity indirect GHG emissions — This category encompasses emissions from purchased electricity an organisation’s equipment or operations use.
  • Scope 3: Other indirect GHG emissions — These are all indirect emissions (not included in scope 2) that are a consequence of the activities of an organisation, but that occur from sources the business doesn’t own or control.

In 2020, my petrol car died and passed to the great vehicle graveyard. This gave me time to reflect and think about changing my transport carbon footprint and impact my scope 1 emissions. 

In the United Kingdom, a new electric vehicle is around 30% more expensive than the petrol equivalent. That is quite a barrier when thinking about the purchase of a new car. However, the cost of charging an electric vehicle is far lower than the price of fuel. This means the cost per mile figure for an electric car is significantly lower than a traditional internal combustion engine.

In my quest to reduce my personal scope 1 direct GHG emissions, I started by renting an electric vehicle.  It’s a small step, and hopefully the price of the electric car will decrease by the time the rental agreement expires. Battery technology innovation will hopefully have increased the mileage range between charges and the electric-charging infrastructure in the U.K. will be more robust.

Signing up for a green pricing program with my electric utility

My change to an electric vehicle has also made me think about the relationship I have with my electric utility provider.  What is the point in reducing my scope 1 GHG emissions, by going electric, only to find that I had transferred my emissions saving to an energy provider that relies on coal-fired power stations? This has meant understanding and being informed about my electricity supplier and how its energy is generated (scope 2 GHG emissions).    

Try a plant-based burger

I have never been a big hamburger eater. A 4-ounce veggie burger with cheese contains 603 grams of CO2e (carbon dioxide equivalent = carbon footprint) against a regular 4-ounce cheeseburger that contains 3.2 kilograms of CO2e. According to Mike Berners-Lee, in How bad are bananas?, if you ate a 4-ounce cheeseburger each day, that would be 1,200 kilograms of CO2e per year — ‘three months’ worth of a 5-tonne lifestyle’. This information and insight provided me with choices. It also helps me think about how the food was produced and that we have choices. However, Gates isn’t telling us we should all become vegetarians or vegans. His point is around moderation: ‘Eating a meat substitute [or simply not eating meat] just once or twice a week will cut down on the emissions you’re responsible for’.

The more informed we are, the better the decisions we make. To build up your climate and carbon literacy during London Climate Action Week why not:

Join Andrew Harding, Chief Executive, Management Accounting, Association of International Certified Professional Accountants, for an LCAW panel discussion that will explore how we can equip finance professionals to support sustainable growth.